OFFICE MARKET REVIEW

Transcription

1 OFFICE MARKET REVIEW WROCLAW July 2012 Prepared by : Anne-Sophie Laytou IK Development 1

2 The strengths of the city of Wroclaw which are making it very attractive to investors: CULTURAL NEWS: Not only Wroclaw was one of the hosts of EURO 2012 but it has also been selected as the European Capital of Culture for This actually makes the city more attractive to foreigners and gives the city the worldwide recognition. EDUCATION IN WROCLAW: Wroclaw is considered as one of the biggest educational center of Poland with its nearly of students, and benefits from high leveled universities especially as it concerns the University of Technology ranked as the best one in the country; that is why the city has specialized on IT, but also on R&D. The city is also considered as one of the first in the country with a high amount of inhabitants having a fluent knowledge of English language (according to BKL Survey 2011, nearly 90% of the students are speaking English, and almost 60% are speaking German). That is why investors can find in Wroclaw young and dynamic qualified personnel. The increase in the number of graduated people is making Poland very attractive to investors from the BPO/SSC sector, and Wroclaw is one of the first city which takes advantages from those investments by being one of the best strategic places in Poland. 2

3 WROCLAW, A STRATEGIC PLACE AS REGARDS ITS LOCATION AND ITS TRANSPORT NETWORK: Wroclaw is in the center of Europe: And benefits of a good transport network: Wroclaw has a transport network composed of several bus lines and streetcar routes which have been incredibly modernized for the past few years, not to mention the fast tram which will cross the city center very soon. The city also takes advantage of the motorway A4 which links to the German s border and reaches Korczowa (the Ukrainian s border) via Opole, Katowice, Krakow and Rzeszow; this is actually the most important section of motorway in Poland. To add, there is also the motorway A8 bypass of Wroclaw. The city has also at it s disposal an international airport, named Nicolas-Copernicus, which is the fifth busiest in Poland. 3

4 A HIGH GROWTH RATE IN POLAND: According to the European Commission, in the European Union, Poland represents the sixth more important economy after The UK, Germany, France, Italy and Spain, with one of the most important growth rate: 3,8% in 2010, 4% in 2011, and it was the only country of the EU which didn t know the recession in 2009 with a growth rate of 1,7%. March 2011 REGISTERED UNEMPLOYED PERSONS AND UNEMPLOYMENT RATE SHOWES THAT WROCLAW HAS A VERY LITTLE NUMBER OF INACTIVE PEOPLE: Wroclaw Province of Dolny Śląsk Polska Population Unemployment rate (%) 5,5 13,4 13,3 Unemployed persons CSO data, in March

5 THE INCREASE IN THE NUMBER OF EMPLOYEES: ABSLInternational Research,2012 data for WROCLAW PROVIDES TO ITS PEOPLE A GREAT QUALITY OF LIFE: This explains in a major part the attractiveness of Wroclaw for BPO investments. In fact, not only the city is appreciated for its economic aspect, but it is also chosen because of plenty other qualities like green parks, best connections to European highways, good accessibility to healthcare, good quality and affordability for goods, services and housing That actually makes Wroclaw the city which is considered to have the most important growth in Poland, attracting as well tourists as investors. 5

6 The current situation of the office market in Wroclaw: DEMAND: Over those past few years, the demand for office space in Wroclaw has been very constant, even growing. Actually, as it is shown in the first part of this report, Wroclaw has strengths that make it very attractive, especially for the BPO sector (Business Process Outsourcing). In fact, not only Wroclaw, as a city of Poland, offers much lower prices on the labor market, but it also provides investors from BPO sector with very qualified workers in the IT and R&D sector. And those companies are actually looking for large office space, like for instance Tieto which signed a pre-lease contract for 8000sqm in Aquarius Business House, Echo Investment development. SUPPLY: The crisis of 2008 had as consequences a limited availability of financing for new projects, this phenomenon was also accompanied by lack of confidence of developers as regards the future demand. Those two facts resulted in a very few new projects completed in 2011; IK Development registered only sqm of new office space for rent. Fortunately that inaction has come to an end. Because the level of demand remains stable and positive, the investors recovered their strength and they started new schemes and projects, at the end of 2011, sqm already were under construction, among others Aquarius Business House phase I, Green Towers phase I and II, Sky Tower. 6

7 New completed office spaces: 2012 Q1 Green Tower phase I m² Q4 Dlugosza Business Park 4 500m² Quantum project 2 489,75m² 7

8 Pl. Strzelecki 3 365m² Racławicka Center 5 000m² 2013 Q1 Green Tower phase II Building B: m² Aquarius Business House Stage I Stage I: m² 8

9 Sky Tower: m² Q2 Olawska m² West house 1b 6 500m² 9

10 Q3 Aquarius Business House Phase II m² Raclawicka 2-4: sq.m Green Day A class m² 10

11 Business Garden Stage I m² Lotnicza Echo Investment m² Archicom 6 500m² Pl. Dominikański / Skanska m² VACANCY RATE: In the first part of 2011, according to the report of IK Development, Wroclaw had an incredibly low vacancy rate of 2%, which was also the lowest among the major regional markets. It has made the task much more complicated for tenants to find available new A class offices of more than 1000 sqm on one floor where there was only sqm of newly constructed buildings. 11

12 We can probably denounce the crisis as the main reason of such a shortage in new projects and then of new spaces. In fact, a drop in the global demand made the investors be more careful. By the end of 2012, according to IK Development, the total vacancy rate including new and existin buildings will be close to 4,8%, the new projects will be very soon completed, like Sky Tower, Aquarius Business House phase I or Green Towers phase II, which alone accounts already for sqm of new available space, anyway still to sqm will be available on the market. RENTS: According to the report of IK Development of 2011, in that period the effective rent in A and B class office buildings amounted 10-13EUR/sqm net. In 2012 the situation is constant, the effective rent is not growing and ranges from EUR/sqm net. 12

13 PROGNOSIS: Demand The demand looks like it will stay constant, as the current uncertain economy and lack of optimism on the market might make the tenants less inclined to lease new office spaces. Supply The supply as we could notice it previously is about to increase in reaction to the constant current demand. Vacancy Rate The vacancy rate may go up in the coming years as the supply reacts with big intensity to the sudden growth of the demand. Rents The level of rents will stay constant, the demand is and will be present but because there is a lot of uncertainty and fear because of the crisis, rents won t be able to increase. 13